Kanpur Plastipack Limited (KANPRPLA) Q3 2026 Earnings Call Transcript

Good morning, everyone, and welcome to the Q3 and 9-month FI26 earnings call of Kanpur PlastiPack Limited. Today, we have with us Mr. Manoj Agarwal, Chairman, Cummanaging Director, and Mr. Shashank Agarwal, Deputy Managing Director. We will begin with opening remarks from the management followed by an interactive Q&A session. Please note that this discussion may include forward-looking statements which should be weaved in conjunction with the risks and uncertainties that the company faces. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star from zero on your touchtone phone. Please note that this conference has been recorded. I now hand over the conference call to Mr. Manoj Agarwal, Chairman and Commanaging Director, for opening remarks. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and welcome to Kanpur Plastic Act's earnings call for the third quarter, and the nine-month period ended 31st of December, 2025. Thank you for joining us this morning for your continued engagement with the company. Q3 financial year 26 has been an important and defining quarter for Kanpur Plastic Act. While the financial performance reflects steady growth, The real progress during the quarter has been on the strategic and structural side, as we continue to reshape the company for the next phase of our sustainable growth. Globally, the industrial packaging and technical kickstiles industry continues to evolve. Customers today are increasingly focused on traceability, regulatory compliances, sustainability, and customized solutions, rather than commoditized volumes. In parallel, downstream industries such as automotive, infrastructure, food, and consumer durables are driving demand for higher-performance, application-specific textile solutions. These trends favor manufacturers that combine scale, engineering capability, and regulatory discipline, areas where Campo FarsiPath has built consistent strength over the years, export platform, and global presence. Our export-led model continues to remain resilient, with Europe being our largest market. During the year, we completed the acquisition of Wallis Ventures in the UK, which statistically strengthens our presence in acute regulatory geography. While the near-term financial contribution is limited, the platform strengthens our long-term export positioning and provides closer market access over time. Extension into value-added and B2C-linked applications. During the quarter, we advanced our transition towards value-added and B2C-linked applications. While FIBC remains the backbone of our business, we are consciously expanding into premium polypropylene yarns and non-proven fabrics that find applications in automobile interiors, furniture, luggage, footwear, geotextiles, And lifestyle products. These segments are less cyclical, more specification-driven, and offer superior margin visibility over time. This is not a tactical shift for us, but a long-term strategic pivot. We believe the feature of manufacturing lies in combining industrial scale with consumer relevance where products are engineered for performance, compliance, and sustainability rather than price alone. Manufacturing strength and capacity building. We continue to strengthen our manufacturing and operational foundation. Progress on the FIBC capacity expansion, completion of the new warehouse for trading division, And the planned role management and automation initiatives, all at Unit 3, are aimed at improving throughput efficiency and working capital discipline as volume scale-ups. These initiatives reinforce our readiness for the next phase of growth while maintaining cost competitiveness. Technology and Capability Development We also advanced our technology roadmap through the incorporation of Essie Can Private Limited, a joint venture with Essie Goma SBA of Italy. This partnership enhances our access to advanced high-performance yarn technology and supports our entry into premium textile applications. It strengthens our technical depth and broadens our product capabilities over time. Sustainability. Sustainability continues to remain embedded in an operational model. Nearly half of our energy requirements are now met through renewable sources, and we continue to invest in recyclable product designs, zero-liquid discharge processes, and passivity systems, capabilities that are increasingly become non-negotiable for global and consumer-facing customers. In summary, Q3 Financial Year 26 reflects steady execution across exports. Product Development, Manufacturing Capacity, and Technology Enhancement. We are building Kampur PlasticPak into a solutions-led, globally relevant manufacturing platform with a balanced mix of B2B scale and B2C linked premium application. I now invite our Deputy Managing Director, Mr. Sashanga Garwal, to take you through the detailed financial performance and execution priorities.

Thank you and good morning, everyone. I will take you through the financial and operational performance for Q3 and nine months ended December 25, followed by our priorities going forward. For Q3 F526, the company reported a total income of 195.2 crores, representing a year-on-year growth of approximately 19%. EBITDA for the quarters stood at 17.8 crores, with an EBITDA margin of 9.1%. The net profit increased to 9.2 crores, up by about 23% year-on-year. The ETS standing at 3.9. Margins remain stable sequentially and reflect a balanced product mix, steady export demand, and continued cost discipline. Revenue, excluding trading activities, remain stable at approximately 147.8 crores, indicating sustained core manufacturing performance. For the nine-month period, total income stood at 543.6 crores, a growth of nearly 20% by-on-by. Abereta increased to 49.7 crores with margins improving to 9.1% while net profit sharply rose to 23.7 crores, reflecting improved operating leverage, tighter cost control, and a higher contribution from value-added products. Exports continue to anchor a performance. During Q3 and FY26, exports volume were 5,900 tons, while the nine-month ended period was about 18,895 metric tons. In Q3, Europe accounted for 62% of Q3 exports, followed by South America at 17% and North America at 15%, with the balance coming from Asia, Australia, and Africa. This diversified geographical mix provides resilience against regional demand fluctuations and supports consistent capacity utilization. Importantly, 80-85% of our business comes from repeat end-users, reflecting long-standing relationships, product reliability, and compliance with global standards. This repeat model provides strong revenue visibility and reduced volatility. From an end-user perspective, our revenues were well diversified across industries. Agro and food industry, 44%, industry packaging, 23%, construction, about 12%, agriculture, 8%, automotive, 7%, mining and minerals, 6%. The diversified industry exposure reduces concentration risk and balances cyclical movements across sectors. The increasing share of food and automotive applications also supports higher compliance-driven and value-added offerings. From a product mix standpoint, FIVC continues to be the core growth engine in both value and volume terms. At the same time, we see a gradual traction in premium polypropylene yarns and specialized fabric solutions, Particularly in... Fashion and automotive applications. This shift supports improved realizations and enhanced earnings quality over time. Operationally, the quarter focused on execution and readiness for scale. The new IOCL Trading Division Warehouse at Pizzini Road has been completed, improving logistics efficiency and reducing dependency on rented facilities. The modern world management system is under design and will enhance inventory control, throughput efficiency, and safety. The construction of the building of FIVC expansion at Unit 3 is approximately 30% completed, target for completion in May 26. This will add an incremental target of up to 6,000 tons per annum in the next 5 years, supporting higher conversion and margin improvement. Our greenfield technical textile nonwoven project based on needle punch technology marks a significant diversification milestone. This facility will address demand from automotive interiors, geotextiles, artificial leather, carpets, and footwear industry. It will be scaled in phased demand-led manner to ensure capital efficiency and relationship management. On the strategic side, Valix Ventures' acquisition provides a direct platform in the UK and acts as a gateway to broader European markets in the times to come. The Estogoma joint venture under Essex and Private Limited strengthens our technology capabilities in high-performance polypropylene yarns and supports our entry into premium textile applications. Product alignment and market development initiatives are currently underway with full swing. The initiative is structured as a long-term capability expansion aligned with our premium application roadmap. Revenue contribution will scale progressively as product approvals, market acceptance, customer awareness mature over time. It is expected to enhance the overall quality and diversification of our earnings profile. Looking forward, our strategy is built around four clear priorities, strengthening the FIBC core through capacity expansion, higher value-added mix, and deeper penetration in regulated export markets. Second, scaling B2C-linked premium applications in polypropylene yarns and non-woven technical textiles through OEM partnerships and technology-led differentiation. Third, disciplined A source allocation with a focus on brownfield expansion, faster payback projects, and balance sheet strength. Fourth, sustainability and technology-led competitiveness, ensuring long-term relevance with global customers. To conclude, Q3 and 9-month FY26 demonstrate stable growth, diversified revenue streams, strong customer retention, and disciplined execution. With a balanced industry mix and increasing share of value-added applications, we are structurally strengthening the business for a long-term profitability. Thank you. We can now begin the question and answer session.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aniket Redkar, an individual investor. Please go ahead.

Hello. Am I audible? Yes. Yeah, so sir, I have some few questions. So in terms of our nine-month financials, So, I can see that our 9-month path has surged to over 200% YOI with strong EBITDA expansion. So, just wanted to understand what strategic action in terms of pricing or the product mix or the geographical diversification contributed most to this turnaround. Just to get some clarity, if you can elaborate on it.

So, you are absolutely right. So, it was driven by a favorable product mix. Operating efficiency gains is the raffia segment, which is basically the FIDCs and fabric, and disciplined cost management. It also reflects the absorption of fixed costs as volumes scaled, along with the strategic exit of the lower margin CPP provision. So this together improved the overall profitability quality. Additionally, the reduced financial costs, stronger manufacturing contribution, amplified the bottom line impact.

Okay, okay, got it, got it. And sir, in terms of this new expansion and the new announcement which has been there, in terms of bi-specification into the premium PP polypropylene yarn and non-woven fabric, and can you throw some light about the JV partnership, and how it is going to add value to our FY27 revenue and the margins, if you can give some idea. So, we're talking about the PP Yans, right? Yeah, yeah, correct.

So, right now, it is at a stage where we are commissioning the project. It is absolutely into the luxury outdoor furniture premium segment. This year, we expect a revenue of about 20 to 25 crores in this year, in the next financial year, sorry. It is a slow gestation project, but the market expansion can have a very rapid growth once we start getting success.

Okay. Okay. And how much capex is applied for this?

So I can clarify this last time as well. So it's a 50-50 joint venture, which is an asset-light model. The investment is only 20 lakh rupees from each partner as capital contribution because this is just a marketing company. The manufacturing will remain with Kanpur PlastiPak itself. So the manufacturing capability will come under Kanpur PlastiPak, but the sales and the technology capability will come under the joint venture.

And, sir, who are the competitors for us? Like, are we comparing with us with these Jagdamba polymers and the Pyramid Technoplast?

No, so this is a totally different segment. This is recyclable, sustainable, dope-dyed, luxury polypropylene yarn. So, this currently is not produced in India at all.

Okay, okay. Just one last question in terms of the industry trend which has been going on. So, with India's flexible packaging market, I've seen that projected to grow very fast near the double digit CAGR. So, where does the management see the largest addressable opportunity in terms of the FMCG, pharma or the industry sector?

So, I mean, the FMCG and pharma sector in India, we are not focused on that, neither the industry nor the segment, because we are primarily into exports as far as packaging is concerned. But yes, you are right, the growth is there, and we do see in pockets there are small demands that are coming up which were not there before.

Okay, okay. And sir, any new development in terms of new product that we are coming with?

So, we are constantly innovating in the FIBC segment. There are, it's a very customized, innovative design process that happens. That happens continuously. There is not a specific product that I would like to speak about. But right now, the entire focus in FIBC is to be customer-centric and driven so that we can provide customized designs to them to increase their efficiency.

Okay. Okay. Okay. And sir, if you can give me a breakup of the domestic and export revenue.

Yeah, just a moment. So, quarter three exports were about 103 crores, and domestic was about 70 crores.

Okay. Got it. Got it. Thank you, sir. This is from my side, and all the best for the future.

Thank you.

Thank you. The next question is from the line of Parishwa from HTSC Bank. Please go ahead.

Yeah. Hi, sir. Good morning. I wanted to understand the rationale for basically the margin difference between your FIDC product and your CP woman and the textile segment. What is the EBITDA margin currently, and going forward, how this EBITDA margin will be shaping in probably FI27 guidance?

So, as you must have seen, the blended EBITDA is about 9%. The manufacturing EBITDA is at about 10.5%. Within the 10.5%, if you break it down into all the four product segments that we are into, which is FIBC, PP woven fabric, commodity multifilament yarn, and UV master batch. The abirata margins of fabric is about at 7%, multifilament is also at about 7%, which makes FIBC go at about 12.5% to 13.5%. So that is the reason why we continuously are changing our capacity from fabric to FIBC, and over the next couple of years, you will see that change in the blended margin as well.

Got it. And right now, FIBC is how much composition of our total business?

One second. So, this year, in terms of the manufacturing turnover, it would be about 54% of the manufacturing. 54%.

And going forward also, are we like going forward, this is expected to increase to what? 80-90% level FIBC contribution?

So, FIBC is 54, fabric is 28, multi-filamentous cell. And others are 8%. So MFI and others will remain at 10 and 8. This fabric 28 will become about 10%. And this 54% will become about 70 to 75%.

70 to 75%. Got it. And FIBC will always be focused towards export only or are we planning to double down in the domestic segment?

So, out of the total sale of FIBC, 90% is exports, 10% is domestic. We will always remain at that ratio in the next 3-4 years. Got it. Understood.

Understood. Any upcoming CAPEX plan or inorganic acquisition plans that we have?

Yes. So, there is a 99 crore rupee CAPEX that we announced last quarter. It has multiple sections. So, it has a phased capex program which improves 6000 tons of FIBC capacity expansion over the next five years in a new building in unit 3 itself. So, this will help us changing the fabric capacity to FIBC capacity because the current utilization levels in core divisions remain healthy, justified, and for expansion. Secondly, there is a role, modern role management system that we are building. This will enhance yield control, reduce wastage, inventory management, and the time it takes to fetch inventory. This should be completed by about July, this year. The third portion of it is the technical textiles non-woven needle punch that would go into the automotive. Segment, artificial leather, photoware, geotextiles, and filtration fabrics. So, that is at about 55 crores. Okay. Got it.

And any inorganic acquisition plans?

Not at the moment.

Not at the moment. Okay. I think that was it from my side. Thank you.

Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.

Hello? Hello? Hello? Hello? Yes, we can hear you. Yeah, Namaskar, sir.

Namaskar, sir.

So, firstly, if you could just give us some understanding of how with the tariff part of the story being put to rest and the current tariff for U.S. being settled at 18%, if you could just give us some color, how has the business environment and the pillars you can share with the investing community?

So, thank you, Sarkis, for the question. First of all, I do not think it is at rest until it is really at rest. So, although 18% has been announced, but what has been formally taking place at the ground level is that there is 25% tariff instead of 18% for the time being until the 18% executive order comes in. It comes with great relief to the industry because there was a migration that was happening from India to other countries. So that will completely stop in the short term and the medium term. In addition to this, what it does is it boosts demand in other countries as well, which are dependent on U.S. So we do see renewed demand coming from Africa and Europe who are exporting to the U.S. as well because it's a positive sign from the U.S. government that they are making tariffs flexible. The EU FTA is also an extremely important point that has come in because from a long-term sustainability of the business in India, with a 0% tariff into EU, India will remain the most competitive across other emerging manufacturing countries. So it would be U.S. The tariff deal and EUFTA are extremely good things for the long-term and the medium-term future.

Sir, can you give us some more color on the order booking scenario? I think so, when we were speaking post-quarter two corn call, you did alluded to the rigs that were pertaining with the extension of 50% tariff affecting the dynamics. Post that, I think so, even the crude oil prices have also inched up. So, I think so, there must be some inflationary impact also on the RM. So, in this context, if you could just explain, firstly, the order booking scenario and the impact of the higher crude prices.

So the order book remains extremely stable. Nothing to be worried about. Neither it is too long nor it is too short. It is absolutely where we are comfortable. In addition to this, there has been a heavy shortage of jute in India. So the government of India has diluted the Jute Packaging Act, which now allows Polypropylene woven sacks to be used in food grain packaging. So this has instilled a short-term boost and demand in the domestic market. So that has helped the order book significantly as well. On the raw material side, yes, you are right. Like all other commodities and crude oil has also gone up or polymer has also gone up by about 10 to 15%. But as you know, in our industry, this gets passed on to the customer. So there is no inflation risk from that standpoint.

Okay. I was pointing, I mean, this was because the reason we found that for the purchase stock in trade for this quarter was significantly higher. So if you could just explain the nature of the thing. And secondly, export volumes were lower. I think so the tonnage was 5600 for Q2, and it was lower by I think so 10% for Q3 at 5928. But margins have expanded. So, if you could just explain, what can we expect in the product mix and what can we expect?

So this time the October and November months were a little special because there were a lot of holidays on weekdays and the number of working days were a little lower because it's a labor intensive industry. We are dependent on manpower and we saw That this time the availability of manpower had significantly gone down due to the festive cena and the marriage season in this quarter. That led to a lower production figure itself. Also, we saw some challenges in the month of October related to power in our city. This also led to a little bit of production challenges, but yes, you are right, there was a shift in the product mix where FIBC as a percentage went up, which is our stated goal that we will continue to do margin maximization. But the margins have also improved because of weak rupee against dollar and euro. So both these things put together, we saw the results being what they were.

And on the on the trading part of the trading

has been used as an opportunity whenever it comes. It is not our core activity. But if it helps us to get something in the contribution, we continue to do that because it helps us reduce our overall raw material cost for our manufacturing as well. So sometimes it will go up, sometimes it will go down, it will not remain consistent.

Okay, sir, why I was trying to understand this aspect was, you have earlier in the previous call alluded to the fact that from H1 revenue, our H2, 15% upar. That is what the trajectory has been. So, once we take this, when we are working with that number, we have to take the X trading, I think, so, a factor X trading into it, yes. Absolutely.

So, yes, so, 15% was just a guidance. It could be 10, it could be 17, depending on the raw material rates and percentage utilization of different divisions. But yes, Q4 will be better than Q3 in terms of the manufacturing turnover.

Okay. Just to put things more into perspective, I think so we have been participating in events, speaking, meeting clients as being done by the postponing of Concall twice. So what is the filler exactly from this participation and your client's visit and even the Japan part of the story which you have been speaking for the last two quarters? Any breakthrough in that aspect? If you could just give some color answer, as you were speaking about the non-availability of the workers, even our employee cost on a consolidated basis has gone up by 2.5 crores for this quarter at 20 crores. So what explains this? Is it the labor code impact that you have done? Because no mention there in the notes.

Yeah, so first of all, you're right that because there was this exhibition, Class India, during that period, 5th to 10th of February, we could not have an investor call, and two days back, the investor call had to be postponed due to a couple of serious customers coming over to Kanpur. So, apologies about that, but yes, there has been very strong response during Class India, and we will continue to have these customer interactions now in TechTextel in Germany in April, and then InterPAC in May, and we will be exhibiting in TokyoPAC in October. However, the Japan business currently has taken a backseat due to the... Extreme demand of Europe and Japan will continue to happen at its slow pace, as I've been continuously saying. When it will take off and how it will take off, time will decide. Once then, opportunity gets created and some space gets created from the Chinese and the Vietnamese supply sources. About the employee cost, I think we will have to clarify it in a better sense in the next investor meet or the presentation. But mostly, this employee cost has gone up due to two reasons. One is the annual inflation that goes up. And secondly, there has been a higher percentage of FIBC production compared to fabric.

Also, there have been some provisions that have been taken due to the new wage code.

Right. If time, if the moderator allows, can I put forward a few more or shall I join the queue, madam?

Sorry for that. You may rejoin the queue, please, for more questions.

I am rejoining the queue, sir, for my follow-ups.

Thank you. The next question is from the line of Dhuroov Mimani from Niveza Investments. Please go ahead.

Hello.

Hello, yes, please go ahead.

Yeah. So, my question was regarding the trading. Is trading included in the exports you mentioned that we are doing currently?

Sorry, could you repeat your question?

Is trading included in the exports? Or is it done domestically?

Trading is only domestic, it is not in exports.

Okay, and so my follow-up question to the IRS, why was there a loss in the trading division this quarter?

There is no loss in the trading division in this quarter.

Okay, so of course. Okay, sir, and then the following question. Okay, so that's all I have for now. Thank you.

Thank you. Just to clarify, the trading division, there is a quarterly profit in the trading division.

Yeah.

Hello.

Yeah.

Yes, sir. The result uploaded IPMC just said we have done a revenue of 47 crores from the trading division, correct?

Correct.

And when we see the segment result, we can see it is a negative 3.53 from trading.

84.39 positive. I'm talking consolidated revenue.

It's on page number. Yeah. Consolidated revenue, I can see it is a negative 3.53.

Just one second, Coach. Yeah, correct.

Yeah, so that's what I wanted to know. How can there be a loss from trading division?

Let me come back on this, please. I do not have a ready answer on this.

Okay.

And so what's the reason for the trading division from 12 crores to 47 crores?

So it's opportunity driven, completely opportunity driven. So there was an opportunity in the market to purchase and sell because there was an arbitrage. Because of our relationship with the suppliers and our market information, we could purchase a higher quantity and there was an arbitrage in the market to sell the product.

Thank you. And my last question would be, what's the current EBITDA from exports and domestic?

So the blended, obviously, we know the exports EBITDA is around 11.5% to 12% and domestic is about 6.5%.

Okay. Thank you.

Thank you. The next question is from the line of Parth Patel from Patel Investments. Please go ahead. Mr. Patel, your line is unmuted. Please proceed.

Hello, am I audible?

Yes, you are audible. Yeah, thank you. Thank you so much for the opportunity, sir. I just had a couple of questions. The first one, I think it was a little bit covered by some other analysts, but I just wanted more clarity that if you see that our contribution from Europe this quarter was about 60%. And now that the US free trade deal and everything has come in. Even the ESPR also has come in. So, how does this affect us as a company?

It affects us very positively. Europe remains our stronghold, and the EU FTA will kick in the next calendar year. So, Europe will remain at the focus, but whatever new capacities are coming into FIBC, they will be serviced to USA. Good morning, everyone. It's an extremely positive sign for the company.

Got it. And are we hedging the revenues that we get from these entities abroad?

Yeah, I'll let my father answer that, yeah.

If we follow a specific hedging policy for our foreign exchange exposures, and we have access to two consultants who keep advising this, It is reviewed on a weekly basis every Saturday on our net exposures in dollar, euro, and pound, and then we'll take action on that. But yes, we do edge periodically.

God, that is very comfortable for us for years. Yeah, it is monitored on every Saturday. God, that does sound very good to us. And the final bit, little bit on the CAPEX, I believe we have about 6000 metric tons of capacity for FIBC expansion that we are planning over the next 4-5 years. So, I just wanted to know what is the total CAPEX outlay that we have for the same, and by what time will we reach the total capacity, like the maximum capacity utilization for the same?

So the capex only for the FIVC portion is only 20 crores. Uh, so this will take four to five years to come up with a target of about 1200 tons addition every year that will be done. Uh, why it is so slow is also because it needs market development exercise, because as you know, that 90% of the businesses will repeat business. So to, uh, break. The barrier of market penetration at the right value, it takes time, and we want to go very step-by-step in a stable manner, so this will take four to five years.

Then just 20 crores is overall, or every year 20 crores?

No, no, overall 20 crores. Out of just 20 crores, about 12 crores is in the building itself.

Oh, that is pretty cheap for FIBC.

Because we already have the extrusion and the weaving capacity. This is de-bottleneaking of certain sections. Not everything is coming up.

It's more of de-bottleneaking. God, that makes more sense. And so what will be the capacity enhanced after that?

So, we will move from 8. So, the current capacity is at about 18,000 tons. So, this will become 24,000 tons by the end of the expansion.

Okay. Got it. Got it. And just one final question, if I can squeeze it in. I just wanted to know that the new Gardner Road warehouse, that for the logistic cost and capital, working capital, how will it impact us?

So, from a working capital perspective, it will really not make a change, but more from a change of operating expenses, because this is an automated warehouse, the retrieval time, the quality of storage, the safety standards that are set, and from a wastage perspective.

Got it, got it. So, logistically, it will become much better and less efficient.

Yes, absolutely.

Makes sense. So, that was all from my side. I'll join the QArgan for any follow-up questions. I just want to wish you all the best for the future. Thank you so much. Thank you.

Thank you. The next question is from the line of Viraj Shah from JJ Investments. Please go ahead.

Hello.

Mr. Shah, yes, you are audible. Hi.

So, first of all, good morning. Congratulations on the strong Q3 performance and the successful incorporation of the JV in January. I had a few questions. Firstly, I joined a little late. I don't know if our questions have been answered previously. So, my question would be, could you break down the total KPEG that we have inputted specifically for the JV? I am looking for a split between equity contribution and debt.

This question is putting into the JV, right?

Yeah, correct.

There is 20 lakh rupees that has been invested into the JV.

Okay, there is no debt. There is no debt. Okay, sir, no debt. Sir, next question would be, how would you describe the competitive landscape in this market? Are we entering in a crowded space? Do you see a gap or any high-quality manufacturers like you said in this market?

So, it is not a crowded space at all. Rather, it's a very novel and niche space. Currently, it will substitute imports that are coming on from Europe. And secondly, because of the availability of this yarn, this market will expand. Currently, this yarn is being imported with a longer lead time and at a much higher price. Once we are there in the market, because the price will also be attractive and the material will be available locally, it will enhance the market size itself. Currently, it's a niche product.

Yeah. Got it. Got it. One last question, sir. How are we statistically different from other established suppliers? What is our USP serving the industry?

Again, about SACAN, right?

Sorry? Yeah.

So, first, it's made out of polypropylene. So, it's about 30% lower weight compared to polyester. Second, it is non-toxic to the environment and to the human body because it is inert, it is polypropylene. Third, it is 100% recyclable, but polyester with PVC coating is not recyclable. Fourth, it is meant for outdoor furniture, means that it can last much longer. So, a combination of all these things today is not present in the market.

Okay. Got it. Sir, is there any cost efficiency in this? Are we advantageous related to cost?

It's a value creation product. It is not a cost optimizing product. So, it is more of a luxurious value creation.

Noted. Got it. Got it. Thank you so much. This answers all my questions. Thank you so much. Yeah. Congratulations.

Hold up, thank you.

Thank you. The next question is from the line of Draveen Sharma, an individual investor. Please go ahead.

Hello, am I audible?

Yes, you are.

Yeah. Hi. Good afternoon, Shashank. Congratulations on excellent results, UC3. And my first question is at slightly higher level. You know, what I see is basically India is a leader in FIBC and FIBC in that. Now, what is the vote India has against countries like Bangladesh? My question is that, you know, labor there is very cheap and we have seen that in the recent deal between Bangladesh and US, they said that they will have a zero duty to import raw materials. So what prevents them from actually entering this particular space and putting up capacities, buying raw materials, PT granules from US and putting up facilities there? This is my first question. And the second question is, you know, in recent one, two years, generally FIBC segment in India, market in India, companies in India are doing very well. So why, what is the tailwind in this particular sector? Of course, the companies like Kansu Plasticac are doing extremely well. Within the segment, but in general, there is a tailwind which is steep. So, what is the reason for this one, two years, you know, last one and a half years or two years? Suddenly, there is a decent amount of profitable growth in this particular sector. These two are not profitable.

Praveen Ji, thank you for asking both the questions. First, Bangladesh. So, Bangladesh, so this product is not only about being manpower intensive, it is also being very supervision and management intensive. In addition to supply chain management, Bangladesh inherently has a disadvantage because it does not have the raw material and also the shipping ports are not the most efficient in terms of the routings that are available. It's a very time sensitive product. And so that's one. Secondly, most of the end users are Fortune 500, Fortune 1500 companies. Unfortunately, the labor practices sometimes becomes the critical point where India is able to score much higher as a country. Thirdly, it is also extremely real estate intensive. So, across all our units put together, we are about 10 to 11 lakhs square feet now. Bangladesh somehow does not have real estate available with them. That is also a very big disadvantage. The availability of engineers, management, graduates to supervise these operations is also extremely poor in Bangladesh. And the final thing is that the entrepreneurship that is there in Bangladesh is driven more by textiles, rather than industrial packaging. So textiles is a far more, it's a customized product, but it's a standard product. So there is no mass customization in textiles. And that is how they are tuned. We are more tuned to mass customization. So an average order length only runs on our line for maybe six to nine hours as against a textile product that could run for maybe 20 days. So that is why it becomes extremely management intensive. So this is the reason why India has been able to consistently do better than Bangladesh and Vietnam both. Regarding the question of the duty structure of India versus Bangladesh. Bangladesh has a 0% duty in EU, which India will have from next year. So this will become a very big moat from next year onwards because today Bangladesh has about 12% of the EU imports. Although US imports, they are only booked at 6%. So, the commodity and the lowest segment of the product might move to Bangladesh in USA, where inventory is not a challenge, lead time is not a challenge, the quality consciousness is not a challenge, the social audit rules are not so stringent. But the higher segment, the medium segment will still remain in India and Turkey. Regarding the second question of the tailwinds in the FIBC industry, so the business is getting more and more complex as the time is proceeding because rather than complexity improving to simplification, it is going on becoming more stringent and more complex, A, due to the unavailability of people, trained people to work, B, due to the migration of the… Customers who used to buy from Mexico and Turkey to India. So more complex bags are coming in to the country. And the total global packaging space itself is growing at a rapid pace. So overall, that is the reason why tailwinds are there with the country. And the rupee has been depreciating as well.

Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. If you have a follow-up question, please reach out to the queue. The next question is from the line of Parshgraf from HDFC Bank. Please go ahead.

Hi, sir. Sir, just wanted to understand that like our FIDC is right now 90% export and 10% domestic. What are the margins? How is the margin between both export and domestic?

It is similar.

It is similar only. Yeah. So what are the domestic challenges? What is the reason we are not very much focusing on domestic and focused on export only when so much geopolitical changes are happening globally? Why not focus on domestic? So just wanted to understand the domestic part of it.

The answer in two sections. First is that the industry produces in India about 45,000 tons per month of FIBCs. And the domestic market is at about 6,000 to 7,000 tons, which is about 15%. So we are not way off from the industry average of percentage of export to domestic. That is first section. The second part is that the domestic industry has three segments. One is the highest segment of food, pharma, and carbon black. There is a second segment, which is of agri and chemical exports. And then there is a third segment of mining, petrochemicals, and commodity. We are present in the second segment and the first segment. We are not present in the third segment. The third segment itself is the majority of the industry itself. That is at a much lower margin.

Understood. Got it. Got it. And so, when we say first and the second segment, that would comprise of how much, sir? 20-25% of the entire industry?

Yes, about 20% of the entire Indian FIBC industry, yes.

FIBC industry.

Third, you said is mining, petrochemical. Correct. And commodities like cement, building materials. Got it.

Those would be standardized bags, basically.

They are not only standardized, but they are also extremely low requirement of certifications and audits.

Understood. I think that's it from my side. Thank you.

Thank you. The next question is from the line of Saket Kapoor. From Kapoor and Company, please go ahead.

Yes, sir. I'll just put forward the question. Firstly, sir, you did alluded to the fact of raw jute crisis and that may emerging as an opportunity for us. So, in terms of volumes, uptick that we may expect from this going ahead, if you could just give some color. And then, previously, in the last call, you did mention about the benefits from the WellEx acquisition would be there in quarter three. So, how much have WellEx contributed in terms of the bottom line? And thirdly, about the Italian JV, sir, which you were just answering to other participants. So, when will we start booking revenues from this JV, sir? These are my set of questions.

So, the SACAN will start booking revenue from next financial year. Valix, I think it has been misunderstood because we never said that there will be a significant increase in either the revenue or the profitability at Valix Ventures in quarter three. It's more of a directional. It will take a couple of years to see any significant results because the end user marketing and B2C relationship takes time to break in. So the team is there, experimentation is happening of what is the right business model to scale up there. And regarding the first question, so in terms of volume, I would say that in this quarter, about 20 to 30% of our volume would go to the government product.

Okay, that is the FIBC.

No, it's not FIBC, it's PPO1SAC.

Okay, so then that will be a margin dilution, sir, for this call?

It will not be a margin dilution. It will not be a margin dilution. It will be in a similar margin range because it's opportunity-driven. It's a one-time opportunity-driven thing.

Okay, and then for the tonnage from the FIBC segment, that will take a backseat since I think so there is only the…

So, fabric will take a backseat. FIBC will remain as is.

Okay, sir, in nutshell, as you mentioned earlier in the call that we may be expecting better performance of both operationally and financially for quarter four versus quarter three, and these are the factors which you just alluded to. So, that understanding is correct, sir?

Broadly, yes.

Okay, sir, if I am missing anything else, sir, then please add to it.

You have got everything.

Okay. Right, sir. Thank you, sir, and all the best to the team, and pranam to Manojji also, sir, not spoken this time.

Thank you, sir. Thank you, sir.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand over the conference to Mr. Shashank Agarwal, Deputy Harmiting Director, for closing comments. Over to you.

I would like to thank everyone who has joined the call and took out this time. We will come up with a couple of clarifications that have been asked and remain unanswered. Thank you for joining in today.

Thank you very much, sir. On behalf of Kanpur, Class TPEC Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect.